Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

Financial Accounting

6. Internal Controls and Reporting Cash

Five Components of Internal Controls

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Multiple Choice

Which of the following generally would be considered good internal control of cash disbursements?

Requiring that all payments be made by prenumbered checks signed by authorized personnel

Permitting cash disbursements to be made from undeposited cash receipts

Having the same employee authorize, record, and reconcile cash disbursements

Allowing employees to approve and pay invoices without documentation

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Verified step by step guidance

Understand the concept of internal control: Internal control refers to procedures and mechanisms implemented by an organization to safeguard assets, ensure accurate financial reporting, and promote operational efficiency. For cash disbursements, strong internal controls are essential to prevent fraud and errors.

Evaluate the options provided: Review each option to determine whether it aligns with the principles of good internal control. Good internal control typically involves segregation of duties, proper authorization, documentation, and accountability.

Option 1: Requiring that all payments be made by prenumbered checks signed by authorized personnel. This is a strong internal control measure because prenumbered checks help track payments, and requiring authorized personnel to sign ensures proper oversight and accountability.

Option 2: Permitting cash disbursements to be made from undeposited cash receipts. This is not a good internal control practice because it bypasses proper documentation and reconciliation processes, increasing the risk of errors or fraud.

Option 3 and 4: Having the same employee authorize, record, and reconcile cash disbursements or allowing employees to approve and pay invoices without documentation. Both of these options violate the principle of segregation of duties and lack proper documentation, which are critical for effective internal control.